Friday, September 26, 2008

"The Limitations of Ideology"

OK, while I'm waiting on my billet for the campaign, I think I'll give you some thoughts on the financial crisis we're in.

There are limits to liberal or conservative ideology if applied in a distilled, orthodox manner.

I have heard Republicans often make the argument for "personal responsibility" as a substitute for too much government interference in our lives, as if being for regulation or in favor of certain government programs somehow represents being "irresponsible". In recent days I have heard some continue to stand by de-regulation as a policy and oppose the bailout of the banking industry. Unfortunately, there are limits to "personal responsibility" when applied as a public policy.

Let's use this example: why not de-regulate our roads?

After all, we all know what responsible driving is. Why not simply rely on people to drive defensively and rationally?

The reason is: the fallibility of human nature.

Many people will tend to drive aggressively in order to get where they are going more quickly, satisfying a short term need or urge at the expense of responsibility. And if the only consequence of this was that they might plow into a mailbox or run their car into a ditch, you take a Darwinistic approach and say: that's what you get.

The problem here is that an irresponsible driver is just as likely to hit you as he is a mailbox!

The same holds true with mortgages. Failure of personal responsibility on a broad scale has consequences for everyone. Consumers are fallible: they are subject to greed, myopia, lack of understanding, or simply being marketed to or taken advantage of. And businesses will too often take the quick buck without seeing around the bend.

And if the only consequence of this fallibility is that some Wall Street execs go belly up and people who made bad decisions lose their homes, then you could say hey, we feel bad for you, but we can't bail you out.

However, when the mortgage crisis spread to the banking industry at large, it became a problem for anyone with money in the stock market or anyone who needs and deserves credit. So we have to bail out the industry to prevent a run on the banks and a massive deflation of the stock market as confidence in the market fails... a depression.

Wouldn't it be so much easier if we simply had a common sense "rules of the road" that ensures that lending and borrowing is done responsibly?

Whether you believe government is a necessary evil or a place where a community comes together to work for progress, surely everyone can agree that you can regulate an industry in a common sense manner without compromising the market economy.

One would hope we could agree, anyway.

But this is where small government orthodoxy, in football terminology, out-kicks its coverage. Besides the fact that de-regulation tends to favor those with capital over those who simply work for a paycheck, much like the failure of trickle-down economics, it fails to recognize that it's better even for those with capital if the middle class grows and we have a thriving source of skilled, educated labor and a huge consumer market. It promotes entrepreneurship and growth in every sector and at every level of the economy. It provides ample tax revenue to maintain our infrastructure (which we are not doing well enough now- just ask anyone in Minneapolis). The whole country is more competitive.

Looking out for your neighbor is not simply a bleeding-heart liberal ideal. It's a matter of self-interest.